Business activity in the private sector continued to grow in August with employment rising at the fastest rate for six months, according to Bank of Scotland's latest survey of purchasing managers.

The August survey found business activity rose “solidly” in August, with manufacturers reporting an overall rise in orders despite a further dip in exports.

Whilst goods producers reported their twentieth consecutive month of growth, August was the fastest growth recorded since January, which was put down to “increased marketing efforts and greater construction activity”.

However, new export orders dipped “for the eighth time in the past 10 months”, with the rate of contraction “faster than that recorded in the previous survey period”.

Bank of Scotland's latest Purchasing Managers' Index suggests a “robust” increase in incoming new business in August, though down slightly on July.

The report states: “Scottish private sector employment remained on the up as a result of growing workloads, stretching the ongoing spell of net job creation north of the border to 21 months”.

Whilst output growth was “broad-based” across both manufacturing and services, new business increased “at a much slower rate, while a lack of pricing power led businesses to reduce output prices”, the report states.

Bank of Scotland said incoming new business growth was “the least marked in 16 months” and order books decreased for the “fourth straight month” which it said has “been the case throughout the current sequence of depletion”, though the rate of decline was “only marginal”. Service sector new business growth “slowed sharply in August, to the weakest in almost a year-and-a-half,” the report states.

The PMI score - a single-figure measure of the month-on-month change in combined manufacturing and services business activity - was at 54.6 in August, which was down slightly on the 56.8 July score, which had been a six-month high.

Bank of Scotland said the August’s survey showed “a lack of pricing power among Scottish businesses, with output charges reduced for the first time in more than a year-and-a-half, albeit only marginally.

“In contrast, average costs rose at a solid rate that was unchanged from July, with higher staff pay reportedly the primary factor leading expenses to rise.”

Commenting on the latest report, Donald MacRae, chief economist at Bank of Scotland, said: “August saw a broad-based rise in business activity across both the services and manufacturing sectors.

“Employment rose at the fastest rate for six months, confirming continuing high levels of business confidence.

“The Scottish economy continues to recover and grow in the second half of 2014.”